The portfolios of property and casualty insurance companies are generally concentrated
in
A) liquid assets.
B) mutual funds.
C) primary securities.
D) U.S. Treasury bonds.
Paul Oldy just purchased a $2,000 face value bond with. The bond pays $45 in interest
semiannually. Paul could sell the bond today for $2,050. The current yield on this bond
is __________ percent.
A) 2.25
B) 2.20
C) 4.50
D) 4.39
Under the Cambridge cash balance approach, money demand is determined by
A) nominal income.
B) real income.
C) the saving rate.
D) velocity.
One of the reasons the velocity of M1 has risen over the long-run is
A) increased economic uncertainty.
B) growth in the money supply.
C) growth in personal income.
D) expanding use of credit cards.
Must a corporation inform the SEC when it borrows from a commercial bank or
through the private placements market?
A) Only from the private placements market
B) Only from the commercial bank
C) From both
D) From neither
The liquidity effect indicates that expansionary monetary policy causes
A) interest rates to fall.
B) interest rates to rise.
C) bond prices to fall.
D) inflation.
The slope of the IS curve will be flatter the __________ is the sensitivity of investment
to a unit change in the interest rate and the __________ is marginal propensity to save.
A) greater; larger
B) greater; smaller
C) less; larger
D) less; smaller
Starting from equilibrium in the ISLM framework, a decrease in money demand results
in
A) a rise in income and the interest rate.
B) a rise in income and a decline in the interest rate.
C) a decline in income and the interest rate.
D) a decline in income and a rise in the interest rate.
If consumption behavior can be described as C = 50 + .8Y, then the saving function is
A) S = 50 + .2Y.
B) S = -50 + .2Y.
C) S = -50 + .8Y.
D) S = 50 + .8Y.
A highly liquid asset is one that
A) loses its value.
B) appreciates over time.
C) can be quickly turned into the medium of exchange without loss.
D) cannot be used in financial transactions.
On a commercial bank’s balance sheet, a checking account appears as
A) a security.
B) a liability.
C) an asset.
D) capital.
__________ generate(s) prices whenever securities are bought or sold.
A) Financial markets
B) Financial institutions
C) The Federal Reserve
D) The Securities and Exchange Commission
In an economy without government or a foreign sector it is always true that
A) actual saving equals actual investment.
B) actual saving equals desired investment.
C) desired saving equals desired investment.
D) desired saving equals actual investment.
The assumption that prices for short-term and long-term securities are determined
independently is the basis for the __________ approach to explaining the term
structure.
A) liquidity preference
B) supply and demand
C) expectations
D) yield curve
Economies of scope exist when a business becomes more efficient by
A) offering fewer services.
B) offering more services.
C) becoming larger.
D) becoming smaller.